Microsoft's Crazy Windows 8 Bet - Invest Smarter Than Steve Ballmer

Adam Hartung
, ContributorBusiness Success today requires identifying and dealing with market shifts. It is insufficient to be operationally excellent, you have to be agile to deal with changing marketsOpinions expressed by Forbes Contributors are their own.

This happened despite deep investments in their "core" PC business. In 2009 Microsoft spent almost $9B on PC R&D; over 14% of revenues. In the last few years Microsoft launched Vista, Windows 7, Office 2009 and Office 2010 all in its effort to defend and extend PC sales. Likewise all the PC manufacturers have spent considerably on new, smaller, more powerful and even cheaper PC laptop and desktop models.

Unfortunately, these investments in their core expertise and markets have not excited users, nor created much growth.

The big market winner invested in trends rather than its core

On the other hand, Apple spent all of the last decade investing in what it didn't know much about in 2000. Rather than investing in its "core" Macintosh business, Apple invested in the trend toward mobility, being an early leader with 3 platforms - the iPod, iPhone and iPad. All product categories far removed from its "core" and what it new well, but all targeted at the trend toward enhanced mobility.

Don't forget, Microsoft launched the Zune and the Windows CE phones in the last decade. But, because these were not "core" products in "core" markets Microsoft, and its partners, did not invest much in these markets. Microsoft even brought to market tablets, but leadership felt they were inferior to the PC, so investments were maintained in traditional PC products. The Zune, Windows phone and early Windows tablets all died because Microsoft and its partner companies stuck to investing in their most important, and best known, PC business.

Microsoft fixated on what it new, and missed the market shift

Where are we now? Sales of PC's are stagnating, and going to decline. While sales of mobile devices are skyrocketing.